What is Smart Contract?
Smart Contract can be defined as a computer program (software) or a protocol designed especially to execute a specific task at a setup time when all the conditions of an agreement between two or more parties are met.
Nick Szabo, a computer scientist, invented smart contracts in 1994, and they have since become a vital component of blockchain technology soon after the launch of Bitcoin in 2008-9. Typically, smart contracts are designed in a programming language compatible with the blockchain on which they will be implemented.
Once implemented on a blockchain, a smart contract becomes a permanent component of the blockchain’s ledger. Thanks to the decentralized nature of blockchain, smart contracts are transparent and immutable, making it safer and more reliable than conventional contracts.
Smart contracts apply to several industries, including banking, real estate, insurance, and supply chain management. They can automate difficult corporate operations, cut costs, boost efficiency, and remove the need for middlemen.
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How does Smart Contract work?
Smart contracts are computer programs meant to execute a contract’s provisions automatically. Using blockchain technology, they are generated and kept on a decentralized network. Once performed, a smart contract cannot be modified or removed.
Here is a detailed explanation of how a smart contract operates:
- Creation
- A smart contract is built by a developer or team of developers using a programming language appropriate for the blockchain on which it will run. The code is added to the distributed ledger after compilation.
- Deployment
- The blockchain’s network will execute the smart contract code when uploaded. The contract gets distributed across all of the nodes in the network and becomes an immutable component of the blockchain’s distributed public ledger.
- Trigger
- When specific circumstances are satisfied, a smart contract is activated. When cargo is delivered, for instance, the smart contract may activate in a system for managing the supply chain.
- Verification
- When the predetermined criteria are satisfied, the smart contract will confirm it. Blockchain technology does this through its immutable and transparent ledger to verify the accuracy of each transaction. The smart contract will continue to the next phase if the requirements have been satisfied.
- Execution
- The smart contract carries out the agreement’s provisions mechanically. For instance, in a real estate transaction, the smart contract may be set up to pay the seller after the buyer has taken possession of the property.
- Recording
- The distributed ledger keeps track of the final results of the operation of a smart contract. This includes any developments that have occurred after the transaction commenced. Due to the immutability of the blockchain, once this information has been recorded, it cannot be changed.
- Validation
- Validation checks the smart contract and transaction. The blockchain network’s nodes validate transactions and update the ledger.
- Settlement
- After the transaction has been confirmed, the settlement procedure commences. This includes transferring assets or payments between parties, updating account balances, and other activities stipulated by the smart contract. The settlement procedure is open and automated.
What is an Ethereum smart contract?
Ethereum smart contract is an automated program on the Ethereum blockchain. The smart contract autonomously runs the computer program on the Ethereum network. Using a programming language designed specifically for the development of smart contracts called Solidity, Ethereum smart contracts are similar to smart contracts on other blockchains in that they are triggered by certain conditions and automatically execute the terms of the agreement when those conditions are met.
Using gas by Ethereum smart contracts is one of its distinguishing characteristics. The processing power required to execute the smart contract is measured in gas. Ether, the native coin of the Ethereum network, is used to purchase gas. The intricacy of a smart contract determines the quantity of gas required.
Moreover, Ethereum smart contracts may be utilized to form DAOs. A decentralized DAO functions autonomously on the blockchain, incorporating voting into the smart contract.
Ethereum smart contracts may communicate with other Ethereum smart contracts and smart contracts on other blockchains. Its interoperability enables the creation of complicated decentralized apps capable of operating across various blockchains.
Smart contracts on Ethereum are performed on the Ethereum Virtual Machine (EVM), a decentralized, Turing-complete virtual processor that can run any Solidity code. The EVM guarantees that smart contracts are performed across the network safely and uniformly. (CODE IS LAW? Smart Contracts Explained (Ethereum, DeFi) | Finematics)
Cardano Smart Contracts
Cardano smart contracts are a self-executing program that runs on the Cardano network. Written in the functional programming language Plutus, based on the Haskell programming language, Plutus is supposed to be mathematically verifiable and mathematically safe, ensuring that smart contracts are bug-free.
The Cardano Settlement Layer is a virtual computer that executes Cardano smart contracts (CSL). The CSL is accountable for processing and validating Cardanol blockchain transactions, including smart contracts transactions. The CSL employs the Ouroboros consensus protocol algorithm to ensure the blockchain stays safe and decentralized.
Formal verification is a mathematical approach used by cardanol smart contracts to assess the correctness of the smart contract code. This method helps to decrease code errors and vulnerabilities, boosting the security and reliability of smart contracts.
What time does Cardano Smart Contract go live?
The Alonzo hard fork upgraded Cardano’s smart contracts on September 12, 2021. This upgrade added the Plutus programming language and the Cardano Settlement Layer (CSL) virtual machine, which runs smart contracts on the blockchain. Developers have deployed smart contracts on Cardano since its launch.
When will Cardano have Smart Contract?
Cardano deployed smart contracts at the Alonzo upgrade on September 12, 2021. Cardano’s smart contract platform company filed an amended proposal and verified Charles Hoskinson‘s launch date. Hence, Cardano already has smart contracts.
Solidity Smart Contract
Developers turn to Solidity, a high-level, object-oriented programming language, to create functional smart contracts. In the Ethereum blockchain, smart contracts are the computer algorithms that regulate the actions of users’ accounts. Inspired by languages like C++, Python, and JavaScript, Solidity is written specifically with the Ethereum Virtual Machine (EVM) in mind.
Solidity contracts store functions and data at an Ethereum blockchain address. The statically typed, contract-oriented language is ideal for Ethereum smart contract implementation.
Smart contracts built with Solidity offer a way to automate business and non-business processes between different users on the blockchain, mitigating risks such as fraud and incompatibility of currencies. For more information on Solidity, check out the official Solidity Portal.
How do Solidity Contracts interact with js contracts in Ethereum Smart Contracts?
Solidity smart contracts in Ethereum may communicate with JavaScript contracts using JavaScript API libraries such as Web3.js. These APIs enable applications to interface with Ethereum network nodes and send transactions easily. The Ethereum TestRPC allows blockchain interaction without needing an actual Ethereum node, making it suitable for contract testing.
Developers may use the sophisticated and versatile Solidity language to develop smart contracts, and tools like Remix and Web3.js make it simple to deploy and interact with these contracts on the Ethereum blockchain. To transmit transactions and access the blockchain from a Solidity smart contract using JavaScript, developers can utilize a mix of the Ethers.js library and contract functions.
Comparison table of Smart Contract
The table compares Solidity Smart, Cardano, and Ethereum Smart Contracts.
| Features | Ethereum Smart Contract | Cardano Smart Contracts | Solidity Smart Contract |
|---|---|---|---|
| Programming Language | Solidity | Plutus | Solidity |
| Asset Support | Ethereum only | Multiple assets | Ethereum Virtual Machine |
| Virtual Machine | Ethereum Virtual Machine | Cardano Settlement Layer | Ethereum Virtual Machine |
| Formal verification | Yes | Yes | Yes |
| Consensus algorithm | Proof of Work and Proof of Stake | Ouroboros | Proof of Work and Proof of Stake |
| Deployment | Gas fees are paid in ETH | Transaction fees paid in ADA | Gas fees are paid in ETH |
| Smart contract templates | Yes | No | Yes |
| Contract execution | Sequential | Concurrent | Sequential |
| Governance system | No | Yes | No |
FAQs
What is Smart Contract?
A smart contract is an agreement between parties codified in a computer program executed on the blockchain and then enforced. It paves the way for completely trustworthy, transparent, and decentralized exchanges without any third parties getting in the way.
How does Smart Contract work?
Smart contracts function by automatically executing code on a blockchain network in response to the fulfillment of predefined criteria. They are immutable and transparent, meaning you cannot modify their code once deployed, and any network participant can watch their execution.
When do ADA Smart Contracts go live?
The September 2021 release of the Alonzo hard fork of Cardano brought with it the addition of smart contract capabilities. Smart contracts will be gradually rolled out on Cardano, with the final release scheduled for the first quarter of 2022.
What are the benefits of using smart contracts?
Smart contracts provide several advantages, such as higher productivity, lower expenses, more openness, and higher safety standards. Agreements may be executed more quickly and reliably with less reliance on third parties thanks to this automation.
